NG exports to Mexico will increase from 2.0 to 3.8 Bcf/d by the end of 2014 or early 2015. Several new NG pipeline projects (primary is NET Midstream Texas) are scheduled to be completed by the end of 2014. Once the pipeline projects are completed they could double the amount of natural gas exported to Mexico in 2014 and triple the same to about 7.0 Bcf/d by 2017. The US currently exports NG to Mexico from the States of Arizona, California, New Mexico and Texas. (Pipeline projects of interest are Ariz: Sierrita lateral 210 mmcf/d - 9/2014; Wilcox lateral expansion 185 mmcf/d 4/2013; Texas: Norte crossing 366 mmcf/d - 7/2013; Samalayuia lateral 238 mmcf/d - 2014; Eagle Ford expansion 2,100 mmcf/d - 12/2014; South Texas expansion 300 mmcf/d - 6/2014) This exportation will not be stopped by the US government because the Mexican state oil company Pemex owns an interest in the major pipeline transporting NG to Mexico and currently needed oil is exported from Mexico to the US. In addition there are several production/import/export treaties between Mexico and the US. Pemex will use its existing DOE Fossil Energy blanket authorization to import natural gas from the US. Mexico is forecast to add 28 GW of new electric capacity by 2017 which would raise the NG needs for Mexican power consumption by over 5 Bcf/d.
Mexico currently imports LNG and is paying over 15/mcf for it, hence they have a large appetite for cheap US NG.
This post needed a bump. The futures market has not taken in the Mexico export factor into play. And Injections so far are not impressive. We may not get to 3.4tcf by next winter and then Mexico exports hit hard.
Marcellus Legacy production is dropping like a rock and more wells are getting hooked up than drilled.
At least another 2bcfd of demand hits in 2015 (from various sectors) and with a rig count of 323 there is no way that supply is going to increase. There is a 9 to 12 month lag on getting new rigs positioned - February to May of next year before its feasible to get significant numbers of new rigs drilling for dry gas.
Disaster is coming if next winter is cold. I've been saying all along this was going to happen sometime between 2015 and 2017. Looks like it will be occurring a little bit earlier now. We need a bunch of 120bcf plus weekly injections soon or its going to hit by next winter. Maybe the big pipeline connections in the Marcellus in September forestall this for a bit, but it's going to happen if NG doesn't move up hard and soon. The longer NG stays low with pathetically low rig counts, the higher it's going to spike.
Yep! And as we've been saying since later 2013 and it is now .....yep had to check....2014.... the exports are a year or less away!
Let's start thinking about how to position as this spring, we know that NG is getting hit, but will rebound.
Ideas on how to play it? I am still with UPL as best idea, SD/CHK still good. Looking at other e&p NG heavy and looking at ugaz or futures. apr/may 2015 intrigue me at 4.05-4.10 for those contracts. anyone every traded futures on ng?